TCI Regional Policy Design Stakeholder Submissions

I support the TCI both to attempt to brake humanities collision course with climate upheaval and to reduce congestion with sensible transportation options.

The climate crisis is the most urgent issue of out time. We need to drastically cut greenhouse emissions, with a large part coming from transpiration. I support the Transportation and Climate Initiative because it will help reduce emissions while creating a bunch of jobs in the process.

For the public record
February 28, 2020

Please accept these comments on the Transportation Climate Initiative (TCI) Framework for a Draft Regional Policy Proposal. We are submitting these comments on behalf of the Foundation for the Economics of Sustainability (FEASTA). Two members of FEASTA’s Board of Trustees reside in Massachusetts and Virginia.

FEASTA has been promoting carbon pricing design for over 15 years, including being an originator of the Cap & Share concept, also referred to as Cap & Dividend in the US. FEASTA also initiated the CapGlobalCarbon project at COP-21 in Paris.

We encourage the TCI to adopt the following design elements of a carbon pricing system:

1) An upstream system: The most comprehensive and easiest to administer point of regulation would be where only upstream companies - i.e. extractors/producers of fossil fuels - are required to hold permits. They would be the buyers at the permit auction. An upstream system would also encompass transportation fuels, an important source of emissions. We were pleased to see the permit system is proposed to be implemented at the Terminal Rack, which is relatively upstream for the transportation sector. We encourage the designers to look ahead to a time when the TCI and the Regional Greenhouse Gas Initiative (RGGI) could be merged in order to provide a single, cross-sectoral, economy-wide carbon price (and dividend, as described below).

2) Auctioning permits: Auctioning is important because we have seen in other “benchmarked” carbon trading programs the tendency to overallocate permits, leaving the price at the minimum. We are pleased to see that the Framework encourages 100% auctioning of permits. The Regional Greenhouse Gas Initiative (RGGI) and the European Emissions Trading System (ETS) have both had a problem with grandfathered (administratively allocated) permits. Industry will lobby for additional permits and exemptions. Politicians are tempted to delay turning the screw, and worried about causing “leakage” or an economic downturn, and so they provide most or all of the previous year’s allocation for free. But ambitious goals are achievable, because the economy does innovate. In RGGI’s case, power plants switched from coal to natural gas, leaving the program overallocated and the permit price at $2/ton. In the next ten years, we expect decreasing electric vehicle battery costs to undercut the business as usual case, and make current baselines obsolete. This can be partially remedied with an escalating floor on the permit price (and that is what California did), but auctioning 100% of permits is better because it lets the market determine the impact of innovation on the permit price.

3) Return carbon price revenues to households as a “Climate Dividend” rather than using them to fund “investments”
We are concerned that TCI is inclined to devote permit auction revenues to spending on state programs and initiatives (“cap and invest”). We think that it would be a much better policy to distribute revenues to the residents of participating states (“cap and dividend”), and there are a number of reasons why.

First, there is the simple economics of the carbon price. As fuel and energy suppliers build the costs of carbon into their prices, it will ultimately be end users—the residents of TCI states-- who will bear the financial burden of the program. This is a good thing, in that it will provide the price signal that will get households to seek alternatives to carbon-intensive modes of transportation, and make it viable for the public and private sector to invest in alternatives. But it has a downside, which is that it drains resources from households just as they need to manage that transition. If states refund the auction money to residents, the program would retain the upside (price signals) while eliminating the downside.

Second, there is the issue of equity and climate justice. TCI is rightly concerned about how a carbon price will affect vulnerable populations, including rural populations. An equal per capita dividend addresses the regressive impacts of the carbon price on low-income households and helps ensure that vulnerable populations are not put at risk by the carbon pricing policy. A climate dividend could eventually become part of a basic income, addressing economic inequality, unemployment, and social justice. We encourage TCI to include mention of climate dividends as an option when conducting outreach with disadvantaged communities (i.e. “would you prefer this project, or an annual climate dividend of $X?”). It would also be possible to extend the program in such as way as to support international climate justice, for example by partnering with a low-GHG country of group of states of similar population to that of the region covered by TCI. In this way the program could form a stepping stone towards a more universal distribution of dividends, reflecting the fact that emissions affect everyone on the planet.

Third, and by no means the least important, there is the matter of principle. In his book of the same name, author Peter Barnes posed the question, “who owns the sky?” The answer is that we all do. If companies are going to purchase permits to pollute a resource that belongs to all of us in common, that money belongs to all of us. Though too infrequently applied in practice, this principle has deep and respectable roots in the work of thinkers like John Locke and Thomas Paine, and it deserves to be given consideration by policymakers today, as urged by writers like Barnes and economist David Ellerman. If it is objected that government needs the money for programs that benefit the public, the answer is that government has other ways of raising money, including the power of taxation (including taxing the dividend). But the public itself has a first claim on the revenue from exploitation of a common resource.

Fourth, there is the question of public support. Providing dividends can be a way of raising public awareness and support for carbon pricing. See, for example, how Alaska’s decision to pay an annual dividend to residents out of a portion of invested Permanent Fund oil revenues —justified on a similar principle, the idea that Alaska’s oil reserves belong to the public and the public should be compensated for their drawdown—has made the Permanent Fund the “third rail” of Alaska’s politics for decades. (I.e., politicians do not dare suggest raiding it.) The Permanent Fund provides many significant benefits to all Alaskans. The dividend helps ensure that the Permanent Fund enjoys robust political support. TCI can learn a lesson from this. (Compare RGGI: relatively few residents of participating states are aware of or understand the program, let alone can be considered a political constituency for the program. And compare Ontario, Canada, where there has been an outright public backlash against carbon pricing.)

Finally, there is the question of the appropriateness of designating the carbon auction revenue as a fund specifically for investments. The experience in Alaska, when a windfall of state oil revenue first became available, was that much of it was invested in projects and programs that did not have lasting value. We can see today that in California, billions of dollars in Cap & Trade revenues are being used for a high-speed rail line and transit- oriented housing development. If an analog were to be proposed in Virginia, the equivalent would be to cover Metro’s shortfall. Emission reductions from areas like these may take decades to materialize, if they materialize at all. If a transportation investment project is worthwhile—and undoubtedly there are many worthwhile projects that TCI states have under consideration—it should be evaluated and funded on its merits, like any other public project, and not be preferentially green-lighted simply because a ready source of funding is available. That would be a recipe for attracting second-tier project proposals. There are multiple sources of funding for transportation investment projects (e.g., general state revenue and the bond market), and project proposals that have real merit ought to have no trouble finding funding from such sources.

In sum: The goal of a carbon pricing program is not to build big capital projects or backfill billions in deferred infrastructure maintenance. The goal should be to provide an economic incentive to Americans to change their economic behavior. Behavior change is better accomplished with the highest politically acceptable carbon price, which can be achieved by returning the funds to American households through a dividend.

Please leave investments in low-carbon transportation to the regular budget process, and return funds from a carbon price on transportation fuels back to the people as a climate dividend.

Thank you for your consideration.
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More information on the Feasta climate group’s work on per-capita dividends can be found at http://www.capglobalcarbon.org and http://www.sharingforsurvival.org .

Feasta (the Foundation for the Economics of Sustainability) is an open-membership think tank. Its aims are to identify the characteristics (economic, cultural and environmental) of a truly sustainable society, articulate how the necessary transition can be effected and promote the implementation of the measures required for this purpose.

Authors: Mike Sandler and Brent Ranalli
Point of contact: Caroline Whyte, +33 385590215, caroline.whyte@feasta.org

I live in Bedford, MA and am a member of Mothers Out Front, actively working to fight climate change for the future of our children. This measure must set a price high enough to effectively reduce emissions according to the latest science. It should also have a strong component of social equity and be fair for rural or low/moderate income people. I greatly appreciate that this is a bipartisan effort.

It is vital that our transportation policies reflect the reality of our world. The transportation sector is a major contributor to climate change and to air pollution. There have been many days in southwestern Pennsylvania in the past few weeks with air quality alerts, and vehicles are a significant contributor to that problem. We owe it to our residents in Pennsylvania to solve these problems by taking action on transportation infrastructure and on transportation policies. I, for instance, intend my next vehicle to be a plug-in electric car (I currently drive a hybrid). But, I do worry about the infrastructure that would make that choice easier. Charging stations are few and far between in Pennsylvania. Long distance travel is a problem! I have solar panels on my house, but the electric grid generally in Pennsylvania needs to move faster toward renewable sources and away from fossil fuel generation of electricity so that charging an electric vehicle truly is a environmentally better choice no matter where it is charged. And finally, we need to move away from fuel taxes as the major source of funds for the transportation sector. As electric vehicles become more common (and they will!), revenues from other sources will be needed to support our transportation system. Let's move forward with intention by planning for a new, clean transportation system in Pennsylvania.

Please Reject the Senate Climate Change Package!

I'm asking you to reject the Senate Climate Change Package consisting of bills S 2477 , S 2478 , and S 2476. This type of taxing does nothing to change the climate and will make the cost of living unaffordable while hitting the working class the hardest. Please stand up for your most vulnerable constituents and our great state and vote against these bills.

We must do everything we can to stop impacting our climate. Please do all you can to create and enact a strong Transportation and Climate Initiative to protect our planet for the future. All forms of pollution must be curbed.

I wonder how this could affect rural communities like my own. Perhaps by developing a ride share program that would actually function? (We have had many discussions and a few failures over the years.) People have to drive up to 30-45 minutes just to buy groceries, or even gasoline! And we all drive vehicles that are far too large but can handle the extreme weather and rough road conditions. So much room for improvement!

Please do not include road widening projects in the transportation bill. The focus should be on public transit and making towns more walkable and bike-able. We need to take real and meaningful steps to combat the climate crisis and putting more cars on the road is not a means to that end. Thank you for all your hard work on this and other issues.